Rise of Industry: Industrialization and the Impact of Inventions

1. Industrialization Chapter 12

2. Bells Chapter 12 • What/who is the first Trust in the US? • Standard Oil • The total value of all goods and services produced by a country • gross national product • Name one concession The Knights of Labor was attempting to get for workers • 8 hour work day/ abolition of child labor/equal pay for women/ creation of worker- owned factories • Process whereby an impartial third party helps workers and management reach an agreement • Arbitration • What does GNP stand for? • gross national product • What new resource spurred industrial growth? • petroleum • He drilled the first oil well near Titusville Pennsylvania • Edwin Drake • Between 1870 and 1910 how many immigrants came to the United States? • Over 17 Million • What year did the Edison company start supplying electricity to New York City? • 1882 • This idea holds that the government should interfere with the economy AS LITTLE AS POSSIBLE. • Laissez-faire • People who risk their capital to organize and run a business. • Entrepreneurs • How much was the Central Pacific Railroad paying its workers from China? • $1.00 a day • How long did it take to complete the Transcontinental railroad? • 4 years • Workers with special skills and training such as machinists were known as • Craft workers • Between 1860 and 1890The average worker’s wages rose by how much? • 50 percent • This started with a nation-wide strike on May 1st,1886 • Haymarket Riot • When a company owns all of the different businesses on which it depends for its operation • vertical integration • When a single company achieves control of an entire market • monopoly

3. Notes Sec 1 CH12: Industrialization The Rise of Industry • Video • The United States Industrializes • By the late 1800s, the United States was the world’s leading industrial nation. • By 1914, the nation’s gross national product (GNP) was eight times greater than in 1865 when the Civil War came to an end. • GNP: the total value of all goods and services produced by a country

4. Notes • Natural Resources • An abundance of raw materials • timber, coal, iron, and copper • Many located in the American West • new resource– petroleum = kerosene • The American oil industry was built on the demand for kerosene, a fuel used in lanterns and stoves. • In 1859 Edwin Drake drilled the first oil well near Titusville, Pennsylvania.

5. Notes • A Large Workforce • Human resources were as important to industry as natural resources • Population growth • Between 1860 and 1910 the population nearly tripled • two causes—large families and a flood of immigrants - more than 17 million immigrated • Producers and CONSUMERS!!

6. New Inventions • 1876 Scottish immigrant - Alexander Graham Bell – is credited with creating the first telephone. (Elisha Gray’s stolen plans helped) • Nikola Tesla (Wireless communication and Death Ray) • inventor, mechanical engineer, and electrical engineer; (Friend then Foe of Edison) • Thomas Alva Edison invented or improved the following: • Phonograph • Electric generator • Light bulb • Motion picture • Dictaphone • Battery

8. EDISON vs. TESLA ($50K joke) • Became rivals because the invention of Tesla’s AC, Alternating current, and Edison’s DC, Directing current • Edison wanted to make people pay to use DC rather than Tesla giving free AC. • Edison wanted to prove that AC was harmful so he shocked an elephant And of course people picked Edison over Tesla

9. Notes • 1882 - Edison supplied electric power to New York City. • In 1889 several Edison companies merged to form the Edison General Electric Company (today known as GE). • George Westinghouse – • air-brake system for railroads • alternating current (AC) system to distribute electricity using transformers and generators. • first to use the hydroelectric power of Niagara Falls

10. Notes • Other inventions during the late 1800s: • Ice machine • Refrigerated railroad car -shipped the first refrigerated load of fresh meat in 1877 • Northrop automatic loom • Power-driven sewing machine and cloth cutter • By 1900 cobblers had nearly disappeared.

11. Notes Free Enterprise • able to industrialize rapidly - free enterprise system • the U.S. practiced laissez-faire economics in the late 1800s.laissez-faire (leh•say•FARE) “let people do as they choose.” • Laissez faire=> Government should interfere with the economy as little as possible • In other ways, the government went beyond laissez-faire and introduced policies intended to promote business.

12. Laissez-faire relies on supply and demand, rather than the government, to regulate wages and prices. • Supporters believe a free market with competing companies leads to greater efficiency and creates more wealth for everyone. • Laissez-faire advocates also support low taxes and limited government debt to ensure that private individuals, not the government, will make most of the decisions about how the nation’s wealth is spent.

13. Notes • The profit motive attracted many entrepreneurs from New England and Europe. • Southern states secede-the Republican-controlled Congress passed the Morrill Tariff-greatly increased tariff rates. • High tariffs contradicted laissez-faire ideas and hurt American companies trying to sell goods abroad. • Later, in the early 1900s, after American companies had become large and efficient, business leaders began to push for free trade because they could now compete.

14. Notes Sec 2 The Railroads -- Linking the Nation • Video • Railroad boom began in 1862 • Abraham Lincoln signed - Pacific Railway Act. • transcontinental railroad -offered two companies land along its right-of-way in order to speed progress. • Grenville Dodge - Union Pacific - engineer - a former Union general -pushed westward from Omaha, Nebraska, in 1865. • Union Pacific – Owned by Thomas Durant

15. The railroad workers included Civil War veterans, newly recruited Irish immigrants, frustrated miners and farmers, cooks, adventurers, and ex-convicts. • At the height of the project, the Union Pacific employed about 10,000 workers.

16. Notes In 1865 - 35,000 miles of track – by 1900 more than 200,000 miles of track.

20. Notes • Theodore Judah - Central Pacific Railroad - engineer • He sold stock to four Sacramento merchants-“Big Four” - Collis Huntington, Charles Crocker, Mark Hopkins, and Leland Stanford were instrumental in building the Central Pacific Railroad and developing California's railroad system in the years between 1861 and 1900 -Leland Stanford-became governor of California, served as a United States senator, and founded Stanford University. • Hired 10,000 workers from China –paid about $1 / day

21. Notes • Completed Transcontinental Railroad in only four years - despite physical challenges. • On May 10, 1869, five gold and silver spikes were hammered into the rails at Promontory Summit, Utah.

23. Notes • Railroads Spur Growth • Linking -railroads increased the markets for many products- spurring American industrial growth • Stimulated economy- spending huge amounts of money on steel, coal, timber, and other materials • unconnected railroads- consolidated • seven giant systems with terminals in major cities and several branches controlled most rail traffic.

24. Notes • Cornelius Vanderbilt -successful railroad consolidator • direct rail service between New York City and Chicago • 1871- began building New York’s Grand Central Terminal

25. Notes • safety and reliability- in 1883 the American Railway Association divided the country into four time zones • The nationwide rail network also helped unite Americans in different regions • became so efficient that the average rate per mile for a ton of freight dropped from two cents in 1860 to three-quarters of a cent in 1900.

26. Notes Robber Barons • To encourage railroad construction across the Great Plains, the federal government gave land grants to many railroad companies. For example; Congress promised UPR and CPR 6,400 acres of federal land for every mile of track it laid • Corruption in the railroad industry gave the impression that all railroad entrepreneurs were “robber barons.” • the term was used to attack any businessman who used questionable practices to become wealthy. It combines the sense of criminal ("robber") and illegitimate aristocracy ("baron").

27. Notes • Jay Gould was the most notoriously corrupt railroad owner • Gould used every underhanded trick, from bribing public officials to massively watering stock to insider trading. • James J. Hill, who built and operated the Great Northern Railroad- honest businessman. • the most successful transcontinental railroad and the only one that was not eventually forced into bankruptcy

28. Notes Sec 3 The Rise of Big Business Video • Big business made possible because of corporations • owned by many people –treated as though it were a person • Owners = stockholder • sale of stock= investing - new technologies, large workforces, and purchase many machines =increased efficiency

29. Notes • economies of scale: -operate in poor economy by cutting prices - increase sales rather than shutting down • competition - led to many small companies going out of business

30. Notes • Consolidating Industry • Pools- agree to keep prices at a certain level • could not enforce their agreements in court • did not last long • By the 1870s, competition had reduced many industries to a few large and highly efficient corporations

31. Steel • Iron carbon method developed in 1850 • Used in railroads, barbed wire, farm equipment, New York City’s Brooklyn Bridge 1883 • Connects the boroughs of Manhattan and Brooklyn by spanning the East River.

32. Main span of 1,595.5 feet, it was the longest suspension bridge in the world from its opening until 1903, and the first steel-wire suspension bridge.

33. Took 14 years, involved 600 workers and cost $15 million (more than $320 million in today’s dollars). • At least two dozen people died in the process, including its original designer

34. Andrew Carnegie • Worked in a Pittsburgh cotton factory as a boy before rising to the position of division superintendent of the Pennsylvania Railroad in 1859. • Invested in iron and oil companies • In 1870s entered in Steel Industry • met Sir Henry Bessemer • 1875 starts steel company in Pittsburgh • uses the Bessemer process

35. Notes • vertical integration of the steel industry • owns all of the different businesses on which the company depends for its operation • Carnegie’s steel company bought coal mines, limestone quarries, and iron ore fields. Vertical integration saved money and enabled many companies to become even bigger. • 1901, he sold the Carnegie Steel Company to banker John Pierpont Morgan for $480 million. • Philanthropist - Eventually giving away more than $350 million.

36. Notes John D. Rockefeller and Standard Oil • Horizontal integration- combining firms in the same business into one large corporation • Example: MTA buying Roger’s cable • Standard Oil Company’s buying of 40 refineries • An automobile manufacturer's acquisition of a sport utility vehicle • Rockefeller -built oil refineries • 1870- Standard Oil -largest oil refiner • began buying out his competitors • 1880- controlled about 90% - oil-refining industry

37. Rockefeller • Accused of engaging in unethical practices: • such as predatory pricing • colluding with railroads to eliminate his competitors, in order to gain a monopoly in the industry. • In 1911, the U.S. Supreme Court found Standard Oil in violation of anti-trust laws and ordered it to dissolve. • By 1937 Donated more than $550 million to various philanthropic causes.

38. Advantages of Horizontal Integration • shared resources common to different products (economy of scope) • Increased market power • Reduction of the cost of international trade by operating factories in foreign markets Disadvantages: • Risk - Will anticipated economic gains materialize? • Is management willing to make all necessary changes?

39. Notes New Business Organizations • Monopoly -When a single company achieves control of an entire market • Three kinds: Legal, Natural, Local • states made it illegal for one company to own stock in another company • Trusts -allows one person to manage another person’s property • person who manages that “property” is called a trustee – managing stocks • First one - 1882 - Standard Oil

40. Notes • Holding Companies • Owns the stock of companies that produce goods • Manages companies it owns - merging them into one large enterprise • The term refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies.

41. Social Darwinism • Competition will ensure the survival of the fittest • Social Darwinism also justified big business' refusal to acknowledge labor unions and similar organizations, and implied that the rich need not donate money to the poor or less fortunate, since such people were less fit anyway. • Big Companies vs. the Little Companies

42. Notes • Investment Banking • J. P. Morgan. John Pierpont Morgan • helped companies issue stock • Companies would sell large blocks of stock to I.B.’s at a discount • I.B. sell it for a profit • J. P. Morgan bought out Andrew Carnegie. Morgan then merged Carnegie Steel with other large steel companies into an enormous holding company called the United States Steel Company. U.S. Steel, worth $1.4 billion, was the first billion-dollar company in American history • In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric.

43. Notes Selling the Product • Advertising companies • The department store • made shopping seem glamorous and exciting • Chain stores • low prices • Woolworth’s • Mail-order catalogs • Montgomery Ward and Sears, Roebuck and Co

44. Notes Section 4 Working in the United States • The average worker’s wages rose by 50 percent between 1860 and 1890 • In 1900 the average industrial worker made 22¢ per hour and worked 59 hours per week Early Unions • two basic types of industrial workers • craft workers and common laborers

45. Notes • Craft workers • special skills and training • machinists, iron molders, stonecutters, shoemakers, printers, • higher wages • Common laborers • few skills • lower wages • Start to form national trade unions - By 1873 there are 33 national trade unions.

46. Notes Industry Opposes Unions- Esp Industrial Unions • required workers to take oaths or sign contracts promising not to join a union • hired detectives to identify union organizers • fired and placed on a blacklist • a list of “troublemakers”—so that no company would hire them • “lockouts” – no pay- hire replacements

47. Notes Political and Social Opposition • no laws giving workers the right to form unions • Courts ruled strikes -“conspiracies in restraint of trade” – fine or jailed • Unions labeled - un-American – Marxist

48. Notes Organizing • The Great Railroad Strike • involved 80,000 workers • two-thirds of the nation’s railways • police, state militias, and federal troops -restore order • 100 dead - $10 mil in property destroyed • need for more peaceful means to settle labor disputes

49. Notes • The Knights of Labor - 1869 • boycotts • Arbitration • eight-hour workday • equal pay for women • abolition of child labor • creation of worker- owned factories • welcomed women and African Americans as members

50. Notes • Haymarket Riot hurts the Knights • Nation-wide strike on May 1st -1886 • Chicago- 80,000 people marched • May 3, police intervened to stop a fight on a picket line - Police kill four • May 4 Anarchist group organized a meeting in Chicago’s Haymarket Square • Someone threw a bomb- kills one officer and wounds six others • The police opened fire - workers shoot back